UPDATE 1-Quicker reform needed after Europe deal-Canada

By Richard Woodbury HALIFAX, Nova Scotia, May 10 (Reuters) - Several European countries must address their fiscal problems if they are to maintain the market confidence restored by this weekend's dramatic rescue package, Canadian Finance Minister Jim Flaherty said on Monday. Flaherty, the longest-serving Group of Seven finance minister, also said the pace of financial sector reform needs to be accelerated in the wake of the rescue. "Some countries need to take fiscal actions. Some have confirmed that they will do so and outlined the fiscal actions they will take. Those countries have the need to fiscally consolidate in order to maintain market confidence," he told reporters. "Financial sector reform needs to be accelerated. And that will be a major topic of discussion when the G20 finance ministers meet in Korea at the beginning of June and when the leaders meet in Toronto at the end of June," he added. News of the rescue deal, the biggest since G20 leaders threw money at the global economy following the collapse of Lehman Brothers in 2008, sparked a steep climb on global stock markets and in other riskier assets. Flaherty said he was satisfied with the "comprehensive and credible" European aid deal and said financial reform will be a key topic for Group of 20 policymakers. Flaherty also urged G20 countries to hold to commitments made on stimulus spending. The $1 trillion emergency package contains standby funds and loan guarantees, plus central bank liquidity measures and bond purchases to steady markets. The Bank of Canada is participating by reestablishing a currency swap agreement with the U.S. Federal Reserve. "This was important in order to maintain confidence," said Flaherty, who said Group of Seven conference calls that he chaired on the weekend lasted for hours. Asked if further talks were planned, Flaherty said he expected them to resume on Monday. "I expect some more discussions this afternoon when I get back to Ottawa with respect to financial regulation and reform and trying to accelerate that agenda so more is ready when the leaders meet in Toronto at the end of June," he said. The finance minister repeated that Canadian banks' exposure to the European debt crisis was "very, very limited" and said that despite Europe's financial woes, Canada's recovery remained intact. "We expect to have continuing economy growth in Canada. Our numbers are good ... We're seeing more credit being available," he said. "We're a little bit ahead of plan in terms our budget anticipated real GDP (gross domestic product) growth. So the signs in Canada are good." (Reporting by Richard Woodbury, writing by Ka Yan Ng and Jeffrey Hodgson; editing by Peter Galloway) Keywords: CANADA ECONOMY/FLAHERTY (kayan.ng@thomsonreuters.com; Reuters Messaging: kayan.ng.reuters.com@reuters.net; 416-941-8109) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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